Tata Steel to Seek Nod to Raise 10,000 crore through NCDs

Mumbai:Tata Steel will seek shareholder approval to raise about 10,000 crore through non-convertible debentures in an exercise seen to help India's oldest maker of the alloy reduce its financing costs.

The debentures, part of a private placement, could be denominated in Indian rupees or any foreign currency, primarily to allow the company the "flexibility to tap into these pools opportunistically."

"Financial markets are very dynamic in nature and it is hard to predict when and which market may provide us with windows of opportunity to raise capital that is cost-effective, has better terms and can help lengthen our maturity profile," Tata Steel said in its notice to shareholders.

"Tata Steel might be seeking the approval to reduce its finance costs, considering that its debt at a consolidated level is still hovering around 70,000 crore," said an analyst, who did not wish to be named.

"However, the important thing to watch out for this year would be whether it would raise funds through a QIP as it is becoming an attractive route to deleverage the books," the analyst added.

The company had, on August 1, 2014 approved the borrowing limit of 70,000 crore and as of March 31, 2017, the net worth of the company stood at 51,934 crore, with a total debt of 28,285 crore. It has outstanding NCDs of 10,176 crore. Tata Steel reduced its net debt by 14% since 2015.

Tata Steel had spent Rs 7,716 crore on a consolidated basis in 2016 on capital projects across India, Europe, South-East Asia, Canada and Africa toward "essential sustenance and replacement as also on growth projects in India and the Netherlands," the company said.

Going forward, Tata Steel's priority is to focus on the Indian market, achieving operational excellence and deliver value-added and differentiated products to its customers, chairman N Chandrasekaran said in the note. Tata Steel Europe is currently pursuing the pension restructuring programme in the UK and is hopeful of concluding it soon, according to the note.